Professionals react to bankruptcy-bill veto

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Debt, particularly credit card debt, is a familiar topic of conversation around the offices of Consumer Credit Counseling Services and local law firms specializing in bankruptcy, especially after the holidays.|ret||ret||tab|

"We definitely see a tremendous increase in clients after Christmas, when the credit card bills start to arrive," said CCCS President and Chief Executive Officer Mike Cherry. |ret||ret||tab|

However, since Dec. 19, 2000, the topic of conversation at the debt counseling service and law firms Reynolds, Parmele & Gold PC and Martin & Associates Attorneys has also included President Clinton's veto of the Bankruptcy Reform Act, which would have restricted bankruptcy filings, especially those resulting from credit card debt. |ret||ret||tab|

The legislation would have established a formula to determine if debtors could pay their creditors under court-supervised plans rather than have their debts dissolved.|ret||ret||tab|

CCCS, as well as banks and credit card companies, supported the bill, which passed in the House of Representatives in October and the Senate in December. |ret||ret||tab|

Clinton, who was expected to veto the bill, said in a release that he thought the bill was unfair to ordinary debtors and working families who fall on hard times. In a June 29, 2000 letter to Speaker of the House Dennis Hastert, Clinton wrote that he thought "government can target bankruptcy abuses without placing unnecessary barriers before those in need of a fresh start who turn to bankruptcy as a last resort."|ret||ret||tab|

"Clinton said he's not opposed to bankruptcy reform, in fact he favors it, but he wants it more oriented toward the middle-class person that really needs help in a bankruptcy," Cherry said. |ret||ret||tab|

"There were some good things in this bill; one of them was that people filing for bankruptcy would be forced into seeking credit counseling ... that's my big pet peeve these people who file bankruptcy, then come back and do it again seven years later, not having learned anything the first time," he said.|ret||ret||tab|

Cherry, who worked in the finance industry for 30 years, most recently with Firstar before coming to CCCS, said he is still appalled when people only a few thousand dollars in debt believe that bankruptcy is their only option. |ret||ret||tab|

"Nobody in bankruptcy court bothers to tell these people that their credit will be ruined for 10 years, and that had they worked out a budget to repay their creditors, they could have had them paid off in two or three years," Cherry said.|ret||ret||tab|

Cherry said bankruptcy should be a last resort for people who have accrued excessive medical bills that they have no hope of paying, or who have been in an accident or suffer from a serious illness. |ret||ret||tab|

CCCS now employs 20 and recently expanded its offices to include a consumer education center where clients can learn budgeting and money management. |ret||ret||tab|

"One problem with the bankruptcy bill was that there was no moneys allocated to pay for the court to monitor debtors and determine if they can repay their debt. We can sit down with someone, and in 30 minutes, tell them what moneys they have to pay their creditors with," Cherry said. "In my opinion, if the court would send debtors to somewhere like CCCS before the bankruptcy, it would be up to (accredited counseling services such as CCCS) to monitor them and it wouldn't even fall to the government."|ret||ret||tab|

Attorney Ken Reynolds of the law firm Reynolds, Parmele & Gold PC is a member of CCCS' board of directors and represents both debtors and creditors in bankruptcy cases. He said he opposed the Bankruptcy Reform Act because it favored credit card companies by making it more difficult for debtors to dissolve their debt, especially to their credit cards.|ret||ret||tab|

"It's hard to feel sorry for these credit card companies, number one, with the outrageous profit that they make, and number two, that they actually solicit more business from people that they know are teetering on bankruptcy," Reynolds said. |ret||ret||tab|

Reynolds said he thinks credit card companies essentially prey on those who are already strapped.|ret||ret||tab|

"It's strictly a numbers game for them I can't prove this, but I think they know that they have a certain amount of write-off from people who declare bankruptcy and they are willing to take that because their profits are so high from the people who do pay the interest. I think President Clinton did the right thing because he's looking out for the common man. We all know that Congress is severely influenced by money, and who has the money here? Is it the credit card companies or is it the debtor who can barely afford the attorney's fees in his bankruptcy?," Reynolds said. |ret||ret||tab|

Reynolds said he's confident another version of the Bankruptcy Reform Act will pass in Congress in the future, especially with the new administration. He said he's not opposed to reforming bankruptcy laws, which have not been overhauled since 1978. |ret||ret||tab|

"A person should be responsible for their debts, but there comes a time when that's not possible," Reynolds said.|ret||ret||tab|

Attorney Dudley Martin of Martin & Associates Attorneys, represents creditors in bankruptcy cases. He said the reform act would have restricted bankruptcy filings for unsecured debt, such as credit card debt, and that he primarily represents secured creditors such as banks and credit unions in bankruptcy cases. |ret||ret||tab|

"I've been watching the bill move through the Senate, and I expected President Clinton to pocket-veto it," Martin said. "Apparently, he feels strongly enough about it to exercise a veto."|ret||ret||tab|

Martin said said he doesn't think bankruptcy is necessarily the easy way out for debtors, but he agrees that bankruptcy reform, as well as credit reform, is needed.|ret||ret||tab|

"There's a lot of abuse on both sides of unsecured credit lines. Credit card issuers take too much risk ... they send out cards, unsolicited, to people through the mail and they don't restrict their credit lines so people don't get in over their heads in debt. I know people who are living on credit cards," Martin said. |ret||ret||tab|

He said the veto isn't the end of efforts to reform bankruptcy laws.|ret||ret||tab|

"If the country goes into recession, the issue will be visited again, I'm sure," Martin said. |ret||ret||tab|

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